Net banking versus Mobile banking: What are the benefits?

In a world that is going increasingly digital, we all live fast-paced lives that do not leave us much time to do anything redundant. So, instead of disrupting our busy schedule to physically visit a bank, we prefer to use net banking from the comfort of our own home or office. Now, what about those who want to attend to all their banking needs on the go? This is where mobile banking comes into play.

A digital user prefers banking to be fast and convenient. And that is exactly what has happened with internet banking and mobile banking. This digitization of banking started with internet banking that brought our banks to our fingertips. Earlier, we would have to visit a bank even for something as simple as the transfer of funds between accounts. But now we can do that and so much more than sit on the sofa or lay on the bed at home by the virtue of online banking. All you need is your unique customer ID and password, and you can access your account round the clock and make transactions as and when needed. Credit card payment, loan repayment and mutual fund debits and all other possible transactions fall under the purview of internet banking. Net banking facilities are available round the clock and simplify banking to a huge extent.

Mobile banking is the same, only that it comes in handy even when you are travelling. Net banking is typically used via a browser on the customer's computer or laptop. A computer is not mobile and we seldom carry our laptops other than during business trips. You may need to do an emergency transaction at any point in time and mobile banking will help you to do that. It really is like internet banking, just that you do it on your smartphone using your bank's app. Be it a transfer of funds, phone recharge or bill payment, your mobile banking app is really your one stop shop for all your banking needs. Mobile banking allows the users to make transactions 24×7 from any place. You may be travelling or killing time at the railway station or airport, the mobile banking app is always available and comes handy.

Internet banking and mobile banking are the two sides to the same thing really and both have given the objective of a cashless Indian economy a huge impetus. While net banking is the perfect banking solution for us when we are at home or office, mobile banking is sometimes even more useful for a digital user who is frequently on the go.

What are factors that can affect your EMI value?

Banks offer a number of different loans to people for a range of different purposes. People normally apply for a personal loan, a car loan, a home loan, a business loan or an education loan. However, it is of utmost importance to calculate the EMI using an EMI calculator on his/her loan before borrowing. He/she needs to understand what factors influence his/her EMI value and how the cost of the EMI is actually calculated. EMI or Equated Monthly Installment is the fixed amount of money that is to be paid to the bank or lender by the borrower. This instalment is to be paid by the borrower until the entire amount of the loan is repaid. The EMI basically consists of two components: the principal amount and the interest on that amount. The interest is divided across every month of the loan repayment period. A person can use an EMI calculator to calculate the monthly instalment that he/she will have to pay.

The main factors that affect the EMI on loan are:

• Principal – This is the amount of money that you have borrowed from a bank or from a lender. This is one of the most important factors while calculating the instalment that you have to pay. This is because the interest is calculated as a percentage of the principal.

• The second factor that affects the EMI is the interest rate at which the money is loaned from the bank. You should carry out some research and understand what factors will affect the interest rates. Getting a loan at a good interest rate is essential as it will have a direct bearing on the amount of money that you have to pay to the lender every month. The interest rate on any loan depends on factors like credit score of the individual, the amount paid as initial down payment, the tenure of the loan and whether the rates are adjustable or fixed.

• The third factor is the tenure of the loan. This is basically the period for which you have taken the loan. If you want to pay smaller amounts every month, you can opt for a longer loan tenure. Similarly, a person who has availed the loan for a shorter duration of time will need to pay a higher sum of money every month.

The EMI value may change when you are paying back the loan. Some of the reasons that may cause this are if you have made partial repayment of loan, if there is a change in the rate of interest in case of a floating rate of interest or if you have chosen flexible EMIs.

Influencing your child’s financial behaviour for the best education loan

Higher education can be extremely costly when one pursues his/her studies from an institute of repute. It would, therefore, be wise on the part of the parent/s to plan in advance. In the present time, an education loan has become almost necessary for parents to give higher education to their children. Such loans are generally granted to meritorious students whose family members do not have the capability to fund their education on their own. An extremely important benefit of education loans in India is that the bank or financial institution will give a person time after completion of his/her course to get a job and then repay the loan.

The eligibility criteria for getting an education loan are as follows:

• Firstly and most importantly, the candidate has to be an Indian National.

• The person must have gotten admission via an entrance test for a higher education course in an institution of repute in India or in a foreign country. However, if the student has taken admission in an institution without sitting for an entrance test, the bank can decide on the criteria of employability and also take into account the reputation of the college/university.

• Generally meritorious students are given this loan even if they get admission under management quota.

One of the most important benefits of an education loan is that interest that is paid on loan can often be subtracted from your income and this helps to reduce the amount of tax that you have to pay. This benefit traces its origin from Section 80C of the Income Tax Act. The tax deduction is on the income tax filing and not on the other taxes paid.

Some other benefits of an education loan are:

• A person is not required to pay any early repayment fees for his/her student loan.

• You can take advantage of lower interest rates if you make your loan repayments on time.

• These loans are very flexible in the sense that individuals can take their time to repay the loan. However, the interest to be paid increases if someone takes a longer time to repay the loan.

• You do not need to mortgage anything while availing an education loan. However, a guarantor is generally required.

• Depending on the discretion of the bank, a student loan can also cover tuition fees, travelling expenses and even hostel fees.

• Education loans can be taken to pursue different courses like diplomas and other professional courses as long as they are taken from a bank or financial institution for the purpose of higher education. Necessary documentation may be required to be furnished to the bank.

The RBI has fixed some ceilings regarding the maximum amount that a person is eligible to get as an education loan. For studying in India, the maximum amount that a person can get is Rs 10, 00,000. On the other hand, the maximum limit is Rs 2000000 for students who want to study abroad. Education loans are one of the best options for meritorious students to continue their studies.

GST Made Easy: Important factors you need to know

The GST or Goods and Services Tax was implemented in all parts of India on July 1, 2017. GST is a destination based tax that is being hailed as a turning point in Indian economy. GST replaces numerous Central taxes like Excise Duty, Counter Veiling Duty (CVD), Service Tax, Special Additional Duty of Customs (SAD), other charges and the state taxes.

GST was introduced to get rid of tax cascading both at the Centre and in the state to reduce the tax burden on the common citizens of the country. It simplifies the tax system with an integrated Goods and Services tax that is the sum of Central GST (CGST) and State/Union Territory GST (SGST/UTGST).  GST ranges from 0% to 28% and the tax slabs are fixed at 5%, 12%, 18% and 28%. Petroleum products, alcohol and electricity have been kept outside the purview of GST. Now a lot of changes have been made to the GST guidelines since it came into being on July 1. Keeping that in mind, here are the important factors you need to know about the gamechanger that GST is.

• Earlier, a total of 228 items were in the highest 28% GST slab. Now the number of items in that slab has been reduced to just 50. Only sin and luxury goods are currently in the 28% tax bracket and the rest of the daily use items have been shifted to the 18% tax bracket.

• Eating out has become much cheaper as restaurants now impose a GST of 5% as opposed to the 18% they charged earlier. Only five-star restaurants at starred hotels where rooms cost above Rs. 7,500 charge 18% GST and can also utilize Input Tax Credit (ITC) benefits. Outdoor catering also falls in the 18% tax bracket and can take advantage of ITC benefits.

• 13 commodities have been removed from the 18% tax slab and shifted to the 12% tax bracket.

• Two things have been moved from the 28% tax slab into the 12% GST bracket and six articles have been moved into the 5% bracket from the 18% bracket.

• Armored vehicles and wet grinder have been moved from the 28% tax bracket to the 12% tax bracket.

The financial experts, industrialists and businesses have welcomed the revised tax rates. They hope that the revised and reduced rates will increase consumption which will result in the growth of the retail industry and the consumer goods sector.

All you need to know about co – branded credit cards

There are so many credit cards available in the market today. Currently, more than 30 million people in India using credit cards; the demonetization of Rs.500 and Rs.1000 notes and the Digital India campaign have given a huge impetus to the usage of credit cards in the country. Now, there are so many different types of credit cards that it can be quite a task to choose one from the lot. There is a special variety of credit cards called the co-branded credit cards that offer some additional benefits. A bank or financial corporation and a retailer come together to launch a co-branded credit card that provides some special benefits to regular customers.

If you are loyal to a particular brand or retailer, a co-branded credit card might actually get you some financial benefits. Co-branded credit cards can be used like regular credit cards all over the world; when you use the card to buy something from the sponsoring retailer, you earn attractive discounts and rewards. Some of the cards even offer 10x rewards including cashbacks, refunds and discounts. Co-branded credit cards are not just beneficial for the card-holders but also for the banks and the merchants as it ensures building a large customer base. Most such cards do not charge any transaction fee and are also known for waiving surcharge. Among all the cards that are out there, the airline and fuel co-branded credit cards are the best and can be the most rewarding. Every time you use an airline credit card, you win points that you can later redeem against you next ticket purchase. If you are a frequent flyer, a large number of points accumulated over a period of time can even result in a free class upgrade.

Now co-branded credit cards can charge high annual fees and the rates of interest can be slightly higher than that of regular credit cards, So, before getting a card, make sure you have full understanding of the fees and hidden charges because then only you can figure out the actual financial benefits that you can enjoy.  Almost all the major Indian banks have co-branded credit cards that offer many facilities.

Almost all the major Indian banks have co-branded credit cards that offer many facilities. It's not about choosing the best credit card in India but about choosing the right one for yourself.  You should choose a co-branded credit card depending upon your needs so that you can reap its benefits to the fullest. Go through the terms and conditions of each of the cards and then choose on wisely to make some clever savings.

Should you park your emergency funds in a liquid or savings account?

Savings account is a simple traditional bank account where money is saved with a fixed rate of interest. Liquid assets refer to your properties, both immovable (homes, land), and movable (furniture, vehicles, etc.). By selling assets, its value is converted to cash or the ‘liquid’ form, meaning you can use it directly in the market.

So if you are trying to save money, you can either save it in liquid assets, or you can opt for a savings account. In most cases, going for a savings account provides many advantages over liquid assets.

• Savings account give you interest at fixed rates on the money you save in the savings account. More you save, you get more returns as interest, effectively increasing your funds. This is the greatest advantage of a savings account over liquid assets.

• Savings accounts have a small minimum balance requirement, which means you can start saving with a small amount of money and keep adding to it as you save along. The interest you get also multiplies your funds.

• Savings accounts do not need a fixed rate of saving money. You can deposit whatever little amount you save in your savings account anytime you want to save some money, adding to your funds little by little.

• As the saying goes, ‘Little drops of water make up the huge ocean’, saving your money in a savings bank account slowly builds up your funds over time into a considerable amount. During emergencies, this money is readily available to you in bulk to use however you need to.

• Interest on money deposited in savings accounts is tax-free up to a certain amount.

• When kept in liquid assets, money is more likely to be spent easily. If you had been saving it for an emergency, spending it on something tempting would not be a very good decision. When kept in a savings bank account, your money remains yours, but you are less likely to spend it on a whim.

• Saving your funds in a savings bank account protects your money from untoward incidents. Liquid assets may be stolen, may be lost or misplaced, or may be vulnerable to calamities like natural disasters. This can be devastating, especially if the money you saved was for emergency purposes.

When stored in a bank, your money is safe and secure, giving you complete peace of mind.
Therefore, if you are looking to save some money, savings accounts provide a far better option than liquid assets.

Why should you avoid multiple personal loan applications?

A financial emergency can occur at any time, and a personal loan can really help an individual get out of a sticky situation. But when applying for a personal loan, one should ensure that they do not send in their application to multiple banks.

This should be avoided primarily because it can lead to the rejection of the personal loan application.

What is a personal loan?

A personal loan, popularly also referred to as an ‘unsecured loan’ can be opted for in case of an emergency situation. A personal loan is given without any security, thus banks do not ask for collateral when one applies for this type of a loan, instead they sanction the loan amount depending on the credit score and history of the loan applicant.
The rate of the interest in case of a personal loan is generally higher in comparison to other types of loans. This is primarily because it is an unsecured loan.

Why should one avoid multiple personal loan applications?

As a personal loan in India is an unsecured loan, banks generally make a thorough inspection of the CIBIL score of the applicant. If the CIBIl history and score show multiple applications of a personal loan made to different banks, the lender will assume that the loan applicant is credit hungry or has been previously rejected by other banks. This will definitely lower his loan eligibility and his application may be rejected.

Thus, one should first find out detailed information about the personal loans offered by various banks. This would include the rate of interest they offer, loan duration and overhead charges. Once this information is collected, make a fair comparison between the banks and choose one bank that you want to send in the application to.

If that bank rejects the application then you may consider submitting a personal loan application to a different bank.

In case you are applying for a personal loan via the ‘direct sales’ passage of various banks, make sure to inform them to avoid applying to various banks at the same time.

There are times when an individual does not have a great credit score, because of the lack of a credit card or he has not taken any other loan before. Even so, banks consider the application of the individual and sanction personal loan in India. But in this case, if the individual applies for the loan in multiple banks there are high chances that he will be rejected.
Thus, one should be careful when applying for a personal loan. It is important to consider all the factors before sending in the application.